Lawmaker says Iran car manufacturers mired in corruption

Iran's
car manufacturing industry is suffering from "widespread financial
corruption," a member of Majlis (parliament) has disclosed.

"Widespread
financial corruption has turned automakers in Iran into a powerful Mafia,"
the spokesman of the parliament's Commission 90, Bahram Parsaei reiterated on
Saturday, August 17.

Speaking
to the state-run Iran Students News Agency (ISNA) Parsaei, a pro-reform lawmaker,
maintained that $250 million was spent for designing a new trunk for the French
Peugeot 206 model, while with the same amount of money they could have run a
new production line.

"Peugeot
206 is manufactured in France, but they have only added a [new] trunk to it in
Iran, and renaming it as Peugeot SD," Parsaei said.

Meanwhile,
according to the lawmaker, two giant automakers in Iran owe $9 billion to the
banks and $7.5 billion to parts manufacturers.

Furthermore,
the automakers have accumulated up to $9 billion in losses, while they sold
$7.5 billion of cars, the city of Shiraz representative to Majlis asserted.

Iranian
car manufacturers are mostly directly or indirectly government-owned and their
losses impact either government institutions or government-owned banks.

Reports
on widespread financial corruption in Iran have been rife in recent months.

But
U.S. sanctions have also heavily impacted the car industry. European automakers
which supply most parts to Iranian factories have largely stopped doing
business with Iran.

Iran's
Justice Department has banned Javad Soleimani the CEO of SAIPA, one of the two
giant car makers in the country, from leaving the country, local news outlets
reported last week.

Earlier,
its spokesman announced that prosecutors have indicted the top managers of
SAIPA.

"Based
on the indictments, six of the SAIPA top managers are presently under arrest,
while 25 others are charged with corruption," he noted.

SAIPA,
an acronym for the French "Société Anonyme Iranienne de Production des
Automobiles", was established during the reign of the pro-West monarch of
Iran, Shah Mohammad Reza Pahlavi, in 1965 with 75% Iranian ownership, to
assemble Citroëns under license for the Iranian market. In 1975 the Iranian
state withdrew from the company.

In
the meantime, reports are saying that the Judiciary has also banned the CEO of
the other giant auto manufacturer (Iran Khodro), Hashem Zare', from leaving
Iran. Nevertheless, the authorities have not yet commented on the reports.

"During
Mahmoud Ahmadinejad's second term of presidency (2009-2013), the government
forced Iran Khodro to run a car production line in another country,"
Parsaei affirmed, adding, "$90 million was invested for the venture, but
it was wasted away since the host country declared that it would not provide
the line with electricity for ten years. Therefore, such a huge national asset
was lost, but nobody was held accountable for it."

However,
Parsaei refrained from naming the host country.

In
the meantime, Masan Nahas, head of the Iran – Syria Chamber of Commerce
recently said that Iran had agreed to open three factories in Syria before the
end of August.

Two
of the factories are going to produce skimmed milk and medicine for cancer, and
the third, will be a car manufacturing factory, Nahas told Al-Watan newspaper.

The
development coincides with the sharp decline in the output of Iranian car
factories as a result of US sanctions that have made it impossible to procure
raw materials and spare parts impossible, as noted recently by Iran's Industry
Ministry.

In
repeated mass demonstrations in Iran since 2017, protesters have voiced their
anger at their government's policy of devoting money and resources for regional
allies, such as Assad and the Lebanese Hezbollah.